The Internet has become the dominant vehicle for data communications with a vast collection of computing resources, interconnected as a network from sites around the world. And with the growth of Internet usage has come a corresponding growth in the usage of Internet devices, wireless devices and services in a way different from the traditional uses of such devices.
The growing base of Internet users has become accustomed to readily accessing Internet-based services, which traditionally were restricted or limited to the “client/server” environment, at any time from any location. Accessibility to traditional business services and products over the Internet means enterprises have to adjust to new paradigms of transacting business.
Consequently, some organizations are, for example, implementing e-commerce and customer relationship management (CRM) strategies to increase revenue and bring them closer to their customer base. But organizations that are committed to an e-business strategy realize that their procurement operations are an equally critical aspect of their business. By implementing a sound e-procurement solution, organizations can truly integrate with their supply chain partners and realize dramatic business efficiencies and cost saving in purchasing everything from office supplies to services to raw materials.
For any organization, procuring goods and services is a core business function that is critical to successful operations of the company. All organizations must procure “indirect” goods such as office supplies and other materials that support business operations and enable maintenance and repair operations (MROs) to function.
In addition, many organizations must also procure “direct” goods, such as raw materials or components that are used in manufacturing processes. Other goods or services that organizations must procure include travel, consulting services and equipment.
Many large organizations have dedicated resources that handle procurement at a corporate level. By centralizing procurement, organizations can bring control over the entire process and improve their purchasing efficiencies. Unfortunately, in many organizations, procurement is still a fragmented, paper-intensive process that involves many forms, phone calls, and approval cycles. Just as procurement requires interfacing with multiple suppliers, it requires interacting with different areas of the organization (accounting, management, lines of business, receiving, etc.) each of which may have different processes and approval flows.
As organizations begin to embrace e-business technologies for selling goods and serving their customers online, they are also beginning to look at the efficiencies that e-commerce technologies can bring their internal procurement operations. Thus, e-procurement is quickly assuming a highly strategic role within the e-business strategies of many organizations.
With e-procurement, organizations can move the entire purchasing catalogs into a central catalog of products from approved suppliers, helping buyers quickly locate goods and services. E-procurement helps automate the formerly time consuming review process typically required to approve requisitions and initiate purchases. Finally e-procurement helps the organization realize efficiencies by accelerating the purchasing process, identifying existing inventory to minimize redundant purchasing, detecting unauthorized spending, determining purchasing patterns for improved budgeting, and ensuring contract compliance.
As the number of business applications on the Internet increases, having restricted content and very limited information about goods and services transactions over the Internet impairs the ability of purchasing professionals to take advantage of Internet technologies and provide efficient and cost effective services.